[S_U_N]

@Saanil: Just like you many of us are waiting for the market to come down from these insane figures. But I don't see that happening if large/ powerful buyers keep buying.
I still picked some shares in the last one-two months and most of them are doing good.


When is the election result going to be announced? In other words, I want to know on which date will the election winner be declared.

I have a nominal amount un-utilized in my demat account and I can take a 100% loss on that amount.
Let me know where I can invest just before that D-date.

[Saanil]

Originally Posted by S_U_N

When is the election result going to be announced? In other words, I want to know on which date will the election winner be declared.
.

16th May - I am not sure if there is a specific time at which it will be announced. Do they generally announce state/region wise?

[swiftnfurious]

Originally Posted by Saanil

16th May - I am not sure if there is a specific time at which it will be announced. Do they generally announce state/region wise?

Since machines are used, I believe everything will be done by 1 PM max.

Edit:: Between, I sold some shares of mine (Nandan Exim) which I had bought 2-3 years back. Had a decent loss (~40%), but I think it's better NOT to have the rest of the amount stuck. Will wait for a week and see the trend and plan to invest into some small caps picked from value-picks blog.

[sgiitk]

Now totally laying off for a month till the market settles, I expect a rise to be followed by a correction.

[WindRide]

Wonder who the fools are who are buying now and keeping the demand high. From various accounts, it doesnt seem to the common man on the street, but rather the firangi FII types .

[alpha1]

Originally Posted by sgiitk

Now totally laying off for a month till the market settles, I expect a rise to be followed by a correction.

I think perhaps a correction might not take place.
BUT it surely will not rise further unless the Indian economy ACTUALLY picks up. Which means money being locked into stock market and not earning regular returns.

Originally Posted by WindRide

Wonder who the fools are who are buying now and keeping the demand high. From various accounts, it doesnt seem to the common man on the street, but rather the firangi FII types .

I always carried an impression that the FII's are the smart types ... and the Indians (especially the public) are the duds.

[nikhilj]

Even after the bull rally of the Indian markets over the past few weeks causing an illogically overpriced market, I believe, that today (15th May, Monday) would still be a good time to assume a long position in NIFTY options.

If the “experts” are to be believed, the NIFTY is set to break 7800 levels, if Modi comes to power. However, some “experts” also say that market could touch 6200-6300 levels, if Mr. Modi doesn’t come to power.

Yesterday, the most traded Call option was the one with the strike price of 7500, followed by the 8000 one. While the most traded Put option was the one with the strike price of 6500, followed by the 6700 one.
The market closed flat at 7108.75.
The 7100 Call closed at 244.95 (Out-of-the-money : 236.2), and
the 7100 Put at 204.15 (Out-of-the-money : 212.9)

To put things in perspective, on the 16th of April, when the market closed at 6675.3,
the 6700 Call was 44.95 (Out-of-the-money : 69.65), and
the 6700 Put was 48.2 (Out-of-the-money : 23.5)
The next day, the market opened at 6695.45, made a high of 6783.05, a low of 6684.4 before finally closing at 6779.4 .

I know that a sample of just one day if awfully small, but the point here is that both the Call and the Put, of the closest strike price as that of the current level, are drastically out-of-the-money, which suggests a highly volatile market.
The Call having a higher premium, and the high strike price Call options (7,500 and 8,000) being the most common are together reason enough to get into NIFTY calls, even at such an over-priced market.

So, the strategy, I’d advise for today is to buy 7100/7200/7300 CE (14 May Closings : 244.95, 193.70, 151.25), hold till Friday (Polling trends to be clear by 11am, results by 3-4pm), and hold, till the market approaches 7500 levels. Once it does, one might observe and place a stop loss to correspond with 7400 levels, with the final exit target being when the market approaches 7800.

For each lot of the above, I’d advise to buy 1 lot of 6500/6600 PE (14 May Closings : 106.00, 129.75) as well. In most probability, this would be a waste, but in the less likely event that Modi is not able to form the government, and NIFTY goes crashing down to the 6200-6300 levels, this would become our saving grace.

So, if you buy a 7100 CE, and a 6600 PE, at 250 and 130, respectively, this is what we can expect:

Investment (per pair)
1 Lot 7100 CE (29-May-14) : Rs. 250X50 = Rs. 12500
1 Lot 6500 PE (29-May-14) : Rs. 130X50 = Rs. 6500
Net : [12500+4000] = Rs. 19000

1. Modi forms the government
NIFTY Estimated to go : 7800
Current Premium on CE : Rs. 250 (Out-of-the-money value)
(Vaguely) Assumed Premium @ NIFTY=7800 : Rs. 150 (8,000 is the second most commonly traded strike price)
Value of CE : 900
(Vaguely) Assumed Value of PE : 0
Profit : [850 - (250+130)]*50 = Rs. 23500/pair

2. Modi does not form the government
NIFTY Estimated to go : 6250
Current Premium on PE : Rs. 710 (Out-of-the-money value)
(Vaguely) Assumed Premium @ NIFTY=6250 : Rs. 50
Value of PE : 400
(Vaguely) Assumed Value of CE : 0
Profit : [400 - (250+130)]*50 = Rs. 1000/pair

3. Before anything solidifies, the CE is sold at the 7400 levels (via SL)
NIFTY : 7400
Assumed Premium @NIFTY=7400 : Rs. 250
Value of CE : Rs. 550
(Vaguely) Assumed Value of PE : 0
Profit : [550 - (250+130)]*50 = Rs. 8500/pair

4. Modi forms Government, but NIFTY stays constant
Pre-rally “expert” advice predicted NIFTY going 7000 “on” Modi’s government formation. But since that level is already past, I don’t see a decline probably at all. So we assume that the NIFTY stays at 7100 even at Government formation.
In this case, the value of options would stay the same, as the premium on both sides should counter the reduce due to time decay (A vague theory).


In none of the scenarios was I able to see any loss in this strategy (Unlikely, hence, would still suggest to assume a risk of upto Rs. 5,000/pair). I’d really appreciate feedback pointing out flaws and/or fallacies in the said strategy by experienced/learned/professional investors/traders.

DISCLAIMER : The post was written at 6:30am on 15 May 2014 (Monday). As of currently I hold none of these positions, but I’d certainly be adding this pair in my portfolio, as soon as the market opens today. Readers are advised to do their own research before investing. These are my own personal views, and I shall not be held liable for any loss incurred in following the strategy mentioned.

P.S. Mods, I just posted a reply (pending moderation) about half an hour ago, kindly delete that, as it has some wrong values (and hence wrong outcomes).

[drsingh]

It's profit booking time for me. Some risky holdings like suzlon energy, Dena bank, and bilt are being liquidated now to book profits over the past year. Funds will be used to partly finance a car of course :-)



The markets have come full circle for me in 6 years. I became interested during the neurotic rise and fall of 2008-2009. I started investing when the sensex started showing some signs of bottoming out at 8k and moved up to 10k. I have become a more mature investor over the years. I respect the big powers that call the shots in our markets. I follow a small number of stocks 50-60 within my circle of competence and try to understand fundamentals of each.

The regrets of the past year are that I missed out on tata steel and Mangalam cements when my fundamental research showed then to be good value buys at 190s and 90s respectively. I failed to trust myself completely. Now the stocks are at 430 and 130 respectively. :-)

[S_U_N]

Ok. So the results are almost out and the market is down.
What is the recommendation? Buy or sell or do nothing?

[sgiitk]

Considering the scorched earth approach of PC the budget will be a nightmare.

[Blue_V]

Can someone explain this. I buy shares of Larsen or MRF through some broker say sharekhan. Would I enjoy the dividends? And how are these stocks?

Originally Posted by Blue_V

Would I enjoy the dividends?

It depends upon the cut-off date [known as record date] announced by the company. If the settlement takes place before the record date, the buyer gets the dividend [cum-dividend - cd]. If the settlement takes place after the record date, the seller will get the dividend [ex-dividend - xd] although he/she sold off his/her shares. But, nothing to worry as the share price gets adjusted in the market to the dividend payable, i.e., the price of a cd share will be quoted more than the xd share to the tune of dividend payable.

[Blue_V]

Can someone please explain in layman terms, dividend and bonus (as seen on money control)? How it affects my stock value? Can I opt for cash instead of re invest into share?

[sgiitk]

Originally Posted by Blue_V

Can someone please explain in layman terms, dividend and bonus (as seen on money control)? How it affects my stock value? Can I opt for cash instead of re invest into share?

Amounts to the same thing. There is a reduction in the NAV! In case of the latter you can liquidate some of your older holding and encash it.

[JMaruru]

Originally Posted by Blue_V

Can someone explain this. I buy shares of Larsen or MRF through some broker say sharekhan. Would I enjoy the dividends? And how are these stocks?

Yes, you would. The brokers(eg. sharekhan, ICICIDirect) are the intermediaries one has to use for trading of stocks.

Originally Posted by Blue_V

Can someone please explain in layman terms, dividend and bonus (as seen on money control)? How it affects my stock value? Can I opt for cash instead of re invest into share?

Dividends are like some part of the profits, the companies distribute among shareholders. The stocks usually adjust once they become ex-dividend. Bonus are announced when they recapitalize some part of the reserves as equity and distribute the same among the shareholders on a prior decided ratio.

You can switch between reinvest and cash options for your MF using the online account.